On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which...

 

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On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which it received all of Scott Corp.'s common stock. The fair value of the common stock issued is equal to the carrying amount of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses but with uniform accounting policies. Also, both maintain accounting records with years ending December 31. On December 31, Scott held in its inventory merchandise acquired from Purl on December 1 for $150,000, which included a $45,000 markup. Net income from separate company operations and dividends paid were as follows: Net Income 6 months ended 6/30 6 months ended 12/31 Puri $750,000 825,000 Scott 950,000 $225,000 375,000 Dividends Paid March 2 November 15 300,000 Assuming no consolidated adjustments other than those indicated by the facts given, consolidated net income is On June 30, Purl Corp. issued 150,000 shares of its $20 par common stock for which it received all of Scott Corp.'s common stock. The fair value of the common stock issued is equal to the carrying amount of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses but with uniform accounting policies. Also, both maintain accounting records with years ending December 31. On December 31, Scott held in its inventory merchandise acquired from Purl on December 1 for $150,000, which included a $45,000 markup. Net income from separate company operations and dividends paid were as follows: Net Income 6 months ended 6/30 6 months ended 12/31 Puri $750,000 825,000 Scott 950,000 $225,000 375,000 Dividends Paid March 2 November 15 300,000 Assuming no consolidated adjustments other than those indicated by the facts given, consolidated net income is

Answer rating: 100% (QA)

To calculate the consolidated net income we need to consider the net incomes of both Purl Corp and S... View the full answer